Monday 22nd January, 2024

The International Monetary Fund (IMF) has told the Rajapaksa-Wickremesinghe government some home truths. Stressing the need to expedite the finalisation of agreements with foreign creditors on external debt restructuring for the next trance of the extended fund facility to be released, the IMF has urged Sri Lanka to increase state revenue further so as to improve its creditworthiness internationally for foreign loans to be obtained.

One may have misgivings about the IMF’s policies, conditions, agenda, etc., but the fact remains that Sri Lanka has to get its act together on the economic front and help others help it. Sri Lanka’s major external creditors wanted the incumbent government to seek IMF assistance and introduce economic reforms, for they did not want to take unnecessary risks. In fact, the government should have curtailed its expenditure, taken steps to boost state revenue and introduce economic reforms of its own volition without waiting for IMF dictates.

If it had been wise enough to do so, instead of slashing taxes and printing money excessively for pandemic relief, etc., to win the 2020 general election and doing precious little to shore up the country’s dwindling foreign currency reserves, no need would have arisen for an IMF bailout, or Sri Lanka would have been able to secure IMF assistance on less constricting conditions.

Old habits are said to die hard. Instead of going all out to curtail expenditure as much as possible, the government is planning what is considered a spending spree, which will adversely impact the economic recovery programme, ahead of the next presidential election.

Minister of Transport, Highways and Mass Media, Bandula Gunawardena has said funds will be made available for development projects after the inking of external debt restructuring agreements. The country cannot do without development work indefinitely, but the question is whether the time is opportune for the resumption of road construction, etc., given pressure it has come under from the IMF to meet its revenue targets. The people are struggling to keep their heads above water and any more tax and tariff hikes are likely to lead to socio-political upheavals. Hence the need for the government to get its expenditure priorities right; a rupee saved is a rupee earned. Only essential road repairs may be undertaken, but politically-determined road construction projects must not be launched.

Speculation is rife in political circles that the SLPP-UNP regime is planning to recommence development work with an eye to elections although the pressing need is for state expenditure to be kept at a bare minimum as long as possible to obviate the need for draconian measures to boost state revenue. The advisability of development-related expenditure at this juncture is in serious doubt.

The Opposition has said the government is without any proper development plans as such, and the funds to be allocated are likely to be misused by the ruling party politicians for political purposes. The government has sought to deny the allegation, but it is common knowledge that the ruling party politicians help themselves to the so-called development funds.

One may recall that the previous Rajapaksa governments made funds available to its MPs and organisers for electioneering purposes through infrastructural development projects at the expense of the economy. Road development is one of the most corrupt sectors in this country, as evident from the unusually high costs of the expressway construction projects which helped the current SLPP leaders and their kith and kin enrich themselves.

It behoves the Opposition, civil society organisations and the media to keep a watchful eye on the government politicians and their cronies who are thirsting for public funds, and ensure that people’s money will not be misappropriated on the pretext of road construction or any other development initiative.